A new consumer loyalty report for the hospitality industry by Kalibri Labs shows that direct booking campaigns by a number of major hotel corporations are not just working, but thriving. Examining hotel stays that took place from January 2016 to August 2018, Kalibri’s research looked at a total of 19,000 hotels that had loyalty programs, ranging from economy to luxury properties throughout the United States, representing a total of 80 million different transactions.
“Some people were sure [consumers] just signed up [for the hotel loyalty programs] to get discounts and that those members may have dropped off,” says Kalibri Labs CEO Cindy Estis-Green. “We didn’t track data by numbers of personally identifying information because of security, but the loyalty numbers keep going up. Fifty percent and growing is now the average when it comes to contribution to occupancy from brand.com channels.”
This study was a follow-up to a 2017 report that suggested the massive amount of direct booking campaigns by hotels launched a year earlier had in fact worked. With this report, hotel brands were relieved to see that these campaigns had not been in vain.
“What the second study has borne out is that the new loyalty members have stayed loyal,” says Chad Crandell, CEO of CHMWarnick, a hotel asset-management company that represents more than 70 hotels. “The return on investment that was somewhat speculative [with regard to the book direct campaigns] has borne out to be very accurate. The direct booking programs were effective in growing the membership base and those members continue to be loyal to the programs they’ve enrolled in.”
The new report also noted that loyalty members comprise the largest customer base for branded hotels in the United States, growing from 30 to 40 percent from 2015 to 2016 when the direct booking campaigns debuted. Even today, nearly half of the business for US-branded hotels comes from loyalty members.
Kalibri’s data also indicates that the net average daily rate for brand.com loyalty bookings is higher than the net average daily rate for bookings made via a third party, such as an online travel agency like Expedia or Booking.com. In addition, the firm’s research demonstrates that the lifetime value of loyalty customers is much higher than non-loyalty customers.
“Ownership is looking for the cost of guest acquisition,” says Crandell. “This helps the industry better understand that we should be looking at net average daily rate, or the net of cost to acquire that guest. The premise of discounting your average daily rate to attract new loyalty members has pretty much gone away. The brands are doing what we hoped they would do: us[ing] technology and service touchpoints which are important to guests to grow the loyalty program and to retain those members to be loyal.”